Timber company Gunns has revealed to the market it is in the process of appointing a voluntary administrator.
The business said its lenders have called for money needed to keep the company operational.
“The company now regretfully advises that the lender group has informed the company that the lenders will not permit the company to retain further funds, which are necessary to meet the operational and working capital requirements of the business.”
“As a result, the company is unable to continue trading and the directors are in the process of appointing an administrator,” the group said.
“That appointment is expected to be made shortly.”
The company said in the statement it was disappointed it wouldn’t be able to pursue a restructure process on its own terms, which it claims would have provided a better result.
“The company is very grateful to all those people, especially employees, past and present, who worked hard to support the company’s strategy,” it said.
“This is a disappointment for them and those associated with the restructure of Gunns business to a plantation-based manufacturing industry in Tasmania.”
The business has been in trouble for some time. Earlier this year the company reported a $904 million loss for the 2011-12 year.
The company has also suffered massive writedowns for its forestry assets, and had been attempting to raise hundreds of millions in order to pay down its debt.
Shares last traded at 16 cents.
Banks still strong against EU threat
The RBA has said Australia’s banks are still in a good position if the European crisis were to expand beyond its own borders.
In the bank’s Financial Stability Review, it said the banking system remains “well placed to cope with shocks from abroad”.
“Many households continue to prefer saving and paying down their existing debt more quickly than required, which has contributed to household credit growth being more in line with income growth in recent years,” it said.
However, it did warn that “many of the underlying problems in the euro area are yet to be effectively resolved”.
Shares open flat after weak offshore lead
The Australian sharemarket has opened flat this morning, following a weak lead from offshore markets.
The benchmark S&P/ASX200 index was down 5.7 points or 0.1% to 4379.8 at 12.00 AEST, while the Australian dollar remained steady at $US1.04.
In the United States, the Dow Jones Industrial Average fell 20 points or 0.2% to 13,558.9.